Bensen Company began operations when it acquired $26,100 cash from the issue of
ID: 2394807 • Letter: B
Question
Bensen Company began operations when it acquired $26,100 cash from the issue of common stock on January 1, 2018. The cash acquired was immediately used to purchase equipment for $26,100 that had a $4,100 salvage value and an expected useful life of four years. The equipment was used to produce the following revenue stream (assume all revenue transactions are for cash). At the beginning of the fifth year, the equipment was sold for $4,540 cash. Bensen uses straight-line depreciation.
Bensen Company began operations when it acquired $26,100 cash from the issue of common stock on January 1, 2018. The cash acquired was immediately used to purchase equipment for $26,100 that had a $4,100 salvage value and an expected useful life of four years. The equipment was used to produce the following revenue stream (assume all revenue transactions are for cash). At the beginning of the fifth year, the equipment was sold for $4,540 cash. Bensen uses straight-line depreciation 2021 2018 $7,940 $8,440 $8,640 7,440 2019 2020 Revenue Required Prepare income statements, statements of changes in stockholders' equity, balance sheets, and statements of cash flows for each of the five years. Present the statements in the form of a vertical statements model. (Statement of Cash Flows and Balance Sheet only: Items to be deducted must be indicated with a minus sign.) BENSEN COMPANY For the Year Ended December 31 Income Statement 2018 2020 2021 2022 0 0: 0 440 $ 2,440 2,940$3,140 1,940S(440) $7,940$ 8,440$8,640 7,440 (5,500) 1,940 evenue epreciation expense Operating income Gain/(Loss) Net income/(loss) (5,500) 2,440 0 (5,500) 2,940 (5,500) 3,140Explanation / Answer
Bensen Company For the year ended Decmeber 31 Income Statement 2018 2019 2020 2021 2022 Revenue 7940 8440 8640 7440 0 Less : Depreciation Expenses 5500 5500 5500 5500 0 Operating Income 2440 2940 3140 1940 0 Gain /(Loss) 440 Net Income /(Loss ) 2440 2940 3140 1940 440 Annual Depreciation = (Cost - Salvage Value) / Life of the Asset = (26100-4100)/4 = $ 5500 Gain on Sale of Equipment = Sale Proceeds - Salvage Value = 4540-4100 = $ 440 Statement of Changes in Shareholder's Equity 2018 2019 2020 2021 2022 Beginning Common Stock 0 26100 26100 26100 26100 Plus : Stock Issued 26100 Ending Common Stock (A) 26100 26100 26100 26100 26100 Beginning Retained Earnings 2440 5380 8520 10460 Net Income /(Loss ) 2440 2940 3140 1940 440 Ending Retained Earnings (B) 2440 5380 8520 10460 10900 Total Shareholder's Equity (A+B) 28540 31480 34620 36560 37000 Balance Sheet 2018 2019 2020 2021 2022 Assets Cash 7940 16380 25020 32460 37000 Equipment 26100 0 0 0 0 Less : Accumulated Depreciation -5500 -11000 -16500 -22000 0 Total Assets 28540 5380 8520 10460 37000 Shareholder's Equity Retained Earnings 2440 5380 8520 10460 10900 Common Stock 26100 26100 26100 26100 26100 Total Shareholder's Equity 28540 31480 34620 36560 37000 Note : All the revenue are in Cash and there in no expenditure for any year, So the Cash Balance will be equals to Revenue. At the Beginning of the Year the Equipment is sold for $ 4540, Cash for year 2022 will be = 32460+4540 = $ 37000 Statement of Cash Flow 2018 2019 2020 2021 2022 Operating Activities Inflow from Customers 7940 8440 8640 7440 Less : Outflow for Operating activity 0 0 0 0 0 Net Cash Flow from Operating Activities (A) 7940 8440 8640 7440 0 Investing Activities Paid for Equipments -26100 0 0 0 0 Sale of Equipments 0 0 0 0 4540 Net Cash from investing Activities (B) -26100 0 0 0 4540 Financing Activities Inflow from Stock Issue 26100 0 0 0 Less : Outflow 0 0 0 0 0 Net Cash from Financing Activities ( C ) 26100 0 0 0 0 Net Change in Cash (A+B+C) 7940 8440 8640 7440 4540 Add: Beginning Cash Balance 0 7940 16380 25020 32460 Ending Cash Balance 7940 16380 25020 32460 37000
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